Reinstatement or Insurance Payment in Corporate Fire Insurance
This article characterizes the optimal corporate fire insurance contract when the insured firm has private information about the economic value of the damaged assets. It is shown that the indemnity should be lower when the firm receives insurance money than in case of reinstatement, but there should...
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| Veröffentlicht in: | The Journal of risk and insurance 2000-12, Vol.67 (4), p.507-526 |
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| container_end_page | 526 |
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| container_issue | 4 |
| container_start_page | 507 |
| container_title | The Journal of risk and insurance |
| container_volume | 67 |
| creator | Bourgeon, Jean-Marc Picard, Pierre |
| description | This article characterizes the optimal corporate fire insurance contract when the insured firm has private information about the economic value of the damaged assets. It is shown that the indemnity should be lower when the firm receives insurance money than in case of reinstatement, but there should be partial coverage even when reinstatement is chosen. When a risk of arson exists, the insurer may only reimburse reinstatement costs. Finally, the optimal contractual arrangement specifies that, in order to discriminate among firms, the insurer may use a (randomly exercised) reinstatement option as a screening device. |
| doi_str_mv | 10.2307/253848 |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 0022-4367 |
| ispartof | The Journal of risk and insurance, 2000-12, Vol.67 (4), p.507-526 |
| issn | 0022-4367 1539-6975 |
| language | eng |
| recordid | cdi_hal_primary_oai_HAL_hal_02968390v1 |
| source | Jstor Complete Legacy; EBSCOhost Business Source Complete |
| subjects | Arson Business insurance Contracts Corporations Crime insurance Economic costs Economic value Economics and Finance Fire damage Fire insurance Humanities and Social Sciences Indemnity insurance Insurance Insurance coverage Insurance policies Insurance providers Insurance settlements Interpretation and construction property values reinstatement Risk exposure Studies Underwriting |
| title | Reinstatement or Insurance Payment in Corporate Fire Insurance |
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